A ‘payment institution’ is defined in the Payment Services Directive (the Directive) as a legal person (i.e. must be incorporated - sole traders cannot be authorised) that has been granted authorisation in accordance with Article 10 of the Directive to provide and execute payment services throughout the European Community.
The Directive was transposed by S.I. No. 383 of 2009 European Communities (Payment Services) Regulations 2009 (the Regulations) which became effective in Ireland on 1 November 2009. The Central Bank of Ireland ("Central Bank") is the competent authority for the purpose of implementation of the Directive.
Payment institutions must obtain authorisation from the Central Bank in order to provide payment services. The provisions of the Directive will apply to persons providing ‘payment services’.
A ‘payment service’ is defined in Schedule 1 of the Regulations as:
1. Services enabling cash to be placed on a payment account as well as all the operations required for operating a payment account.
2. Services enabling cash withdrawals from a payment account as well as all the operations required for operating a payment account.
3. Execution of payment transactions, including transfers of funds on a payment account with the user's payment service provider or with another payment service provider:
(a) execution of direct debits, including one-off direct debits
(b) execution of payment transactions through a payment card or a similar device
(c) execution of credit transfers, including standing orders
4. Execution of payment transactions where the funds are covered by a credit line for a payment service user:
(a) execution of direct debits, including one-off direct debits
(b) execution of payment transactions through a payment card or a similar device
(c) execution of credit transfers, including standing orders.
5. Issuing and/or acquiring of payment instruments.
6. Money remittance.
7. Execution of payment transactions where the consent of the payer to execute a payment transaction is given by means of any telecommunication, digital or IT device and the payment is made to the telecommunication, IT system or network operator, acting only as an intermediary between the payment service user and the supplier of the goods and services.
Transitional Arrangements
A firm authorised by the Central Bank to provide money transmission services and engaged in the provision of such services before 25 December 2007 may avail of the transitional provisions set out in Article 88 of the Payment Services Directive (Regulation 115 of the Payment Services Regulations) whereby the firm may continue to provide such activities in Ireland until 30 April 2011 without the requirement to be authorised under the Payment Services Regulations.
Authorisation as a Payment Institution
Should a firm wish to continue to provide payment services after 30 April 2011 it will have to obtain authorisation as a payment institution from the Central Bank. An application for authorisation as a payment institution must be submitted sufficiently in advance of this date in order to allow for processing of the application. Within three months of receipt of an application or, should the application be incomplete, of all the information required for the decision, the Central Bank shall inform the firm whether the application has been granted or refused.
It should be noted that until such time as a firm is authorised as a payment institution it cannot passport its services into other Member States.
The Central Bank is currently accepting applications for authorisation as a payment institution from firms. An application form is available on the Central Bank’s website - http://www.centralbank.ie/industry-sectors/payment-institutions/Pages/forms.aspx.